CHAPTER 7: SEGMENTATION, TARGETING AND POSITIONING
Design a Customer - Driven Marketing Strategy
Targeting
Differentiation
Segmentation
Positioning
Divide the total market into smaller segments
Select the segment(s) to enter
Differentiate the market offering to create superior customer value
Position the market offering in the mind of target customers
Segmentation
Segmenting Business Market
Segmenting International Market
Segmenting consumer market
Grouping buyers based on needs, traits, behaviors that might require separate marketing strategies or mixes
Types
Psychographics
Geographic
Behavioral
Region of country
Provinces
Country
Cities
World region
Neighborhood
Population size
Demographics
Age & Life cycle
Household Income
Ethnic or Cultural group
Social class
Lifestyle
Personal characteristics
Occasion - based purchased
Benefits sought
User status
Usage rate
Loyalty status
Readiness stage
Purchase approaches
Situational factors
Operating characteristics
Personal characteristics
Economic factors
Political & legal factors
Geographic location
Cultural factors
Segment consumers who have similar needs & buying behavior even though locating in different countries
Based on their opinions, interests, emotions.
Attitude toward product
Based on different geographical units
The most popular bases (closely with consumers wants, needs, usage rates)
Based on consumers knowledge, attitudes, uses, responses to a product
Multiple segmentation
Identify better - defined target groups
A powerful tool for marketers of all kind
Buying behavior & benefits provide best basis
Overall economic development
Population's income levels
Stability of government
Monetary regulations
Receptivity to foreign firms
Bureaucracy
Religions
Values & attitudes
Common languages
Customs
Behavioral patterns
Requirements for Effective Segmentation
Substantial
Accessible
Differentiable
Measurable
Actionable
Certain segmentation variables are difficult to measure
The size, purchasing power, profiles can be measured
Effectively searched and reached
Should be the largest possible homogenous group pursuing with a tailored marketing program
Conceptually distinguishable
Respond differently to different marketing-mix elements and programs
Designed for attracting & serving the elements
Market Targeting
Select target market segments
Levels
Evaluate market segments
Structural attractiveness
Company objectives & resources
Size & growth
The largest, fastest-growing are not always the most attractiveness to every company
Some company may lack of skills and resources needed
Affect long-run segment attractiveness
Forces
New entrants
Competitors
Substitute products
Relative power of buyers
Power of suppliers
Unprofitable -> even take steps to encourage that group to shop at the competition
Mesh with company long-run objectives
Enter only which segments create superior customer value & gain advantages over competitors
Micromarketing
Consists of a set of buyers who share common needs or characteristics that the company decides to deserve
Undifferentiated Marketing (mass marketing)
Differentiated (Segmented) Marketing
Concentrated (Niched) Marketing
Focus on & target what is common in the needs of customers (whole market with 1 offer)
Ignore market segment differences
Trouble competing with more-focused firms (better satisfying the needs of specific segments and niches)
Increase the cost of doing business
Target several market segments & design separate offers for each
Extra marketing research, forecasting, sales analysis, promotion planning, channel management
The greater knowledge
Goes after a large share of one or a few segments or niches
Effectively
Consumer needs in niches it serves
Special reputation it acquires
Fine-tune products, prices, programs to the needs of carefully defined segment
Efficiently
Towards consumers can serve best and most profitability
Local
Tailors products and marketing programs to the needs of specific segments (local & individual marketing)
Individual
To whom live in the same city/ neighborhood/ shop in same store
Effective in the face of pronounced regional and local differences in demographics and lifestyle
Meet the needs of first-line customers
Drive up manufacturing and marketing cost by reducing economies of scale
Create logistics problems
To individual customers (mass customization)
Make relationship with customer more important than ever
Unlike mass production
Choosing a targeting strategy
Product life-cycle stage
Product variability
Market variability
Company resources
Competitors' marketing strategies
Differentiation & Concentration: products that vary in design
Undifferentiated marketing: uniform products (grapefruit or steel)
One version -> Undifferentiated/ Concentrated marketing
Mature stage: differentiated marketing
Competitors use differentiated/ concentrated -> undifferentiated can be suicidal
Competitors use undifferentiated -> gain advantage by differentiated/ concentrated
Socially responsible marketing
Social responsibility trumps profitability if efforts are seen as exploitative or irresponsible
Caution to be taken in target marketing
Target vulnerable or disadvantaged consumers with controversial or potentially harmful products
Marketing of adults products spills over into the children's segment (intentionally/ unintentionally)
Differentiation and Positioning
Strategy
Product Position
Place the product occupies in minds of consumers relative to competitors
Consumer perception of products
Perceptual positioning map
Show consumers perceptions of their brands versus competing products on important buying dimensions
Based upon 2 variables (price & quality)
Select competitive advantage(s) on which to create position
Identify competitive advantages
Develop a poisoning strategy
Understand customer needs better than competitors, then deliver more value
Points of differentiation can occur anywhere in the entire customer experience
People
Channels
Services
Product
Image
Features, performance, style, design
Consistency, durability, reliability, repairability
Speedy, convenient, cautious
Expedient, convenient, cautious
Ex: transactional banks
Coverage, expertise, performance
Hire & train better than competitors
Training, culture, morale
Distinctive intangible benefits
Multiple differences (Which differences)
One unique selling proposition (USP) - (How many differences to promote)
Important
Distinctive
Superior
Communicative
Pre-emptive
Affordable
Profitable
The difference delivers a highly valued benefit to targeted customer
Competitors do not offer difference
Company can offer it in more distinctive way
Competitors cannot easily copy the differences
Communicable & visible to buyers
A complex set of consumers perceptions, impressions, feelings compared with competing products
Demographics (industry, company size)